Homework SourseA diesel generator is needed to provide auxiliary power in t
A diesel generator is needed to provide auxiliary power in the event that the primary source of power is interrupted. Various generator designs are available, and more expensive generators tend to have higher reliabilities should they be called on to produce power. Estimates of reliabilities, capital investment costs, operating and maintenance expenses, market value, and the damages resulting from a complete power failure are given in the table below. If the life of each generator is 10 years and the MARR is 10% per year, what is the total annual cost of alternative S if you assume three main power failures per year?
-$77,500
-$86,522
-$98,066
-$108,660
-$94,082
| a. | -$77,500 | |
| b. | -$86,522 | |
| c. | -$98,066 | |
| d. | -$108,660 | |
| e. | -$94,082 |
Solution
The following assumptions are taken for alternative S
the capital cost is $170,000
the market value of salvage is $25,000
the reliability probability is 95% or .95
the probability of failure is 5% or .05
the time period is 19 years
the MARR is 10%
the cost of one failure is $400,000 in year it is $12,00,000 (three times power failure in a year
The O & M cost is $8,000 per year
we have to calculate the total annual equivalent cost for alternative S
we have to first calculate the capital recovery amount the formula is
capital recovery amount = [( P –S)(A/F , I,n) + S(i)]
where
P = capital cost $170,000
S= salvage value is $25,000
I= interest cost is 10% or .10
N = number of years is 10
Putting values in formula we get
CR = [( 170,000–25,000)( 0.1627) + 25000(.10)]
CR = 23598 + 2500
CR = $26098
Now we will calculate annual cost of O&M expenses which is $8000
Now we will calculate the probability cost of power failure
= $12, 00,000 x 0.05 = $60,000
The total annual equivalent cost = $26098 + 8000 + $60,000 = $94,098 rounding off $94082 answer is e
